Delaware Healthcare Industry Blog

Primary Care on the Brink

Continuing the Morris James’ government relations team’s seven days of updates on the 149^th Legislative session with today’s topic: where is Delaware when it comes to foundational health policy? 

Under the Markell administration Delaware received a $35 million State Innovation Model (SIM) grant from the federal government to transform its delivery system. A lot of work went into strategies surrounding healthy neighborhoods, healthcare IT, workforce, practice transformation, and the shift away from fee for service using tools like common scorecards for quality metrics. Some dollars were committed to actual implementation, but the SIM grant’s strongest value to the state was in planning and sharing stakeholder vision. 

When Governor Carney entered office in 2016 his focus moved away from the SIM conversation and into his own vision of the healthcare benchmark (more on this when the administration’s report comes out at the end of the month). It started a related, but new conversation about how to put downward pressure on the overall healthcare cost inflation rate. 

All of these conversations have been valuable, but they have been just that, substantially: conversations. What has not happened in the last five years is any major local action. Five years in the rapidly-changing current healthcare climate is an eternity.

So what did happen in the market while our policymakers were searching for the answer to the healthcare cost problem? Primary care spiraled down in Delaware.  The numbers don’t lie. The average primary care spend per state is 5-8%. The recommended spend for a robust primary care system is 12-15%. Delaware’s is 3-4%.

The result of this lack of focus is a tipping point in frontline care. A tipping point at which an alarming number of primary care practices in Delaware have been closing, merging with systems, or “going concierge,” effectively limiting their patient panel only to those who can afford an additional out-of-pocket fee. The rate of this activity has been accelerating. 

If you’re an employer in Delaware, none of these options are good. Coordinated primary care is the most efficient and least costly medicine there is. Each dollar invested in primary care returns anywhere from $2 to $15 to the system.

However, Delaware’s insurance dollars haven’t followed this model. In commercial insurance, which nationally pays 120-140% of Medicare rates, the Delaware rates are instead 65-85% of Medicare. Some insurers will argue, with some validity, that once you layer in bonuses and incentives – sort of value-based care lite – that practices net close to Medicare. This fails to note the obvious, however, which is that Medicare is unsustainable. In healthcare finance we often talk Medicare because it’s an understandable baseline. But it’s definitely a baseline, insufficient to sustain a practice if Medicare was all that was in a patient panel. 

Regardless, a few things seem undisputed as the stakeholders met: 

• Primary Care is necessary and important
• Primary Care is failing
• Something has to be done

On behalf of the Medical Society of Delaware, the Morris James Government Relations team drafted Senate Bill 199.  The legislation is designed to (1) short-term, shore up existing practices by creating a Medicare floor for primary care reimbursement in the commercial, Medicaid, and State employee plans along with establishing chronic care management reimbursement, and (2) long-term, move overall primary investment to the 12% mark at the rate of about 1% a year. 

As drafted, the legislation allows flexibility so that innovative programs and value-based care can be worked into its mechanics. It also is complementary, and arguably a necessary underlying component, to the Carney administration’s “benchmark.” The legislation is the first real, major action item that the legislature has seen on healthcare in nearly a decade.

HB 199 started a frenzy-paced conversation as the sponsors seek passage by June 30^th, understanding the urgency of practice failure and wanting to act. The sausage grinder ground remarkably fast and over the course of a month, and a compromise bill, Senate Bill 227 was introduced. The key components remain present: a Medicare payment floor; better-defined chronic care management scheme; and mandatory data reporting from payers to the claims database. Medicaid has been removed as Medicaid already had key components of patient management and par payment with Medicare. Lastly, and importantly, the compromise bill contains a new mandate to the Healthcare Commission to take the 12% goal and better define its implementation.

Senate Bill 227 is not the answer to the primary care problem. But it buys practices time to fend off collapse and it creates an important and necessary space for a pointed conversation on the long-term vision for primary care in the First State that is measured in months, not years.

Tomorrow, watch this space for the Morris James Government Relations Team’s third installment on healthcare in the 149^th legislative session, focusing on firearm control legislation, and the possibility of Tarasoff 2.0 in Delaware healthcare. 

For more information, contact Drew Wilson at awilson@morrisjames.com.

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